The Importance of Measuring Your Return on Investment in a Poor Economy

The economy is struggling right now. Although there are signs of a recovery, the markets are still very much below expectations, and companies are reporting massive drops in profits. This has caused many companies to look into what they can do to ensure that they are making the most money possible.

Previously, many companies were not measuring their return on investment particularly granularly. As long as departments were making money, there was a general feeling of satisfaction.

However, the falling economy has changed that and the money available to invest is limited. Therefore, it has become more important than ever to ensure that you are investing wisely, and the best way of doing that is by carefully measuring your ROI.

ROI 101

Return on Investment, also called ROI, is simply a statistic that shows you what you are getting for your money, time and resources invested in a project. Usually, that return has a monetary value but it could also be used in the context of a hiring process or when measuring the KPIs (Key Performance Indicators) of a department.

What you need to know is just what your investment is getting you, so that you can make an educated business decision as to whether that is the correct and worthwhile return or whether you would be better off investing your assets elsewhere.

For this reason, poor economies have always seen companies naturally move towards projects that can give a discernable ROI: they want to see what their money or assets are getting them and that is obviously the smart thing to do.

Direct Response Marketing

With statistics being one of the most important factors as far as any direct response marketing campaign is concerned, a company can always be sure of seeing the exact facts and figures at any given point.

Such campaigns can ensure that the return on investment is a KPI that is consistently monitored for value. They can decide if the return on investment when it comes to that particular campaign justifies its continuation, or even expansion, or if it were better off trying something else.

The ability to quickly alter adverts in such campaigns, no matter the media used (televisions, newspapers, magazines, the Internet and so on) means that companies who use such campaigns during a poor economy are better able to react to what are very volatile trading conditions.

When comparing such a type of advertising to the likes of brand building and PR (where monitoring your ROI is sometimes next to impossible), it’s easy to understand just why it is such a powerful tool for businesses when times are tough.

Direct response marketing helps keep your ROI high by cutting out a lot of middle men and going straight to the potential customers. By providing an easily measured ‘call to action’, the success of the campaign is easily monitored whilst costs are kept low by bypassing what are considered the more expensive options such as hiring branding consultants.

Obviously, this type of marketing also helps raise the profile of the brand, adding an additional and less measurable return on investment. But when it comes down to advertising methods during the credit crunch, direct advertising is showing, yet again, just why it is such an important part of any advertising mix. Its statistic monitoring and ability to track the return on investment is truly phenomenal.